Richemont profit surges but full-year growth likely 'less exceptional' | Fin24
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Richemont profit surges but full-year growth likely 'less exceptional'

Nov 17 2017 12:55
Lameez Omarjee
Johann Rupert, chairman of Richemont. (Picture sup

Johann Rupert.

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Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg – Luxury goods holding company Richemont [JSE:CFR] reported an 80% growth of its bottom line in its half-year results, but according to chairperson Johann Rupert growth for the year will not be as “exceptional”.

According to the results report for the six months to end-September 2017, the growth in operating profit by 46% or €1.16bn (R19.45bn) helped boost the bottom line to €974m (R16.33bn). The operating margin was up 80%.

“While we cannot predict the environment for the full year, it is clear that the full year results on a comparative basis will not see the exceptional value of growth reported in the period under review,” Rupert said in the report.

Sales were up 10% to €5.61bn (R94bn). Rupert explained that the positive sales were a reflection of the improved macroenvironment. The group also benefited from improved exchange rates.

Jewellery sales boost growth

Jewellery sales particularly were one of the strongest performers, with growth up 15% to €3.16bn (R52.99bn).

Its different regional operations also reported higher sales, with Asia Pacific leading with 25% growth mainly due to a recovery in Hong Kong. Jewellery and watch sales were particularly strong, according to the report. Asia Pacific accounts for 39% of total group sales.

Operations in the Americas saw sales grow 8%, on the back of jewellery sales rather than clothing. “The reopening of the Cartier flagship store in New York in September 2016 and the opening of Van Cleef & Arpels Design District store in Miami in March 2017 had a positive impact.”

Operations in Europe, which account for 29% of total group sales, saw sales growth of 2% and were helped by double-digit growth in the UK.

The group’s operations in the Middle East and Africa saw sales grow 1%, affected by geopolitical uncertainties.

Its specialist watchmakers grew sales by 6%, due to improvements in retail and wholesale channels.

Its “other” division - which includes Montblanc, the group’s fashion and accessories businesses, and the group’s watch component manufacturing activities - reported growth of 3%. 

Speaking on recent board changes Rupert said the new board and management team bring diverse skills sets, relevant to the challenges the businesses are facing. “They are focused on defining the group’s transformation agenda to meet changing demands of luxury consumer.”

Basic headline earnings per share were €1.773 (R29.73). A dividend of 1.80 Swiss francs per share (R25.75) was declared.

The share price opened at R124.80 on the JSE, but dropped by over a percentage to R123.03 by 11:45.



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